Having a business often means that an employer has several employees. Thus, they have to cover taxes, pay their workers, and much more. One such potential task is dealing with payroll and paystubs. But what is a pay stub, and why do you need one?
What Is A Paystub?
An employer provides a paystub detailing an employee’s total earnings, deductions, and net compensation. Pay stubs are generated alongside paychecks, so each employee receives a fresh monthly pay stub.
Federal law in the U.S. does not require employers to provide pay stubs, but local legislation may have a few rules and regulations. Employers must check local laws related to pay stubs and taxes to ensure they don’t break any rules.
Typically, the pay stub elements include the following:
- Information in general. The pay stub must always include basic identifying information. It includes the name f employer (or company) and the address. It also includes the employee’s name, address, and Social Security number.
- Period of pay. The pay stub should specify the days for the payments plus the total number of hours worked.
- Gross wages. The entire amount earned in pre-tax money for the pay period. The employee’s gross compensation would be $300 if they worked 15 hours at $20 per hour. You must record the number of hours an employee worked during the period, the pay rate, and other data, including time off, benefits, premiums, etc.
- Tax deductions. A line should state each tax taken from the check, including federal, state, unemployment, Social Security, and Medicare withholdings.
- Deductions for employee benefits: Indicate how much was withheld to allow the employee to contribute to health insurance, health savings accounts, life insurance, and retirement contributions.
- Involuntary deductions. These are wage garnishments that might include things like unpaid taxes or court-ordered child support payments. This occurs if the employer is approached by the IRS or court officials, who must ensure that an employee follows the court orders.
- Any voluntary deductions. This field on the pay stub displays the amount an employee decides to withhold monthly, which might include a recurring charity gift. However, the employee must approach an employer and state what amount they want to give away to charity or any other non-profit organization.
- Net pay. It is the sum of money a worker receives as a salary they can use. The number displays the income received by the employee after the employer withheld all taxes, deductions, premiums, etc.
As you see, the list is quite extended. However, the information added to the pay stub depends on each company. For instance, your employees don’t want you to give money to charity on their behalves. The standard document enlists the company’s and employees’ names and addresses and how much they earn before and after deductions.
Still, taking care of the pay stub is a challenging and tedious task. Most businesses and self-employed individuals use software tools or generators to create pay stubs. But before we dive into the details of how to use generators, let’s see why pay stubs are beneficial.
Why Do You Need A Paystub?
If local laws enable you to skip providing employees with a pay stub, you still may want to use it for two main reasons:
- for tax purposes;
- to easily resolve any occurring issues or disputes with your employees.
Moreover, providing workers with a pay stub is a transparent way to cooperate with them. They understand their earnings, taxes, and contributions. You may use various services to generate pay stubs for convenience purposes.
How To Create Paystubs?
First things first, check out state and local laws to understand requirements. State official websites often contain guidelines and even templates that enable business owners and self-employed individuals to create pay stubs.
The main disadvantage of downloading free templates from state websites is that they are in PDF formats. Thus, you must manually edit the template each time you fill out the document. It may be an appropriate option for self-employed people or businesses with not many employees, but not for companies with extended staff.
If that’s your case, or you prefer to use convenient online tools, you may use pay stub generators. A pay stub generator enables you to choose an appropriate template and fill out the document for each employee. The best thing about such an option is that you can use online generators with customizable templates. You can add your logo, contact information, and other details you deem appropriate.
Start using a generator tool by creating an account. The process is simple and requires you to add info about your company, the number of employees, etc. Once you shoe a template, you can customize it. Moreover, some tools offer to save standard data so that you don’t have to fill it out every time. This data includes the company’s name and address and each employee’s name and address.
What Services To Use?
Now that you know that you can use a simple generator, what services can you choose? Here are a few examples of reliable and accurate tools:
- Real Check Stubs.
- 123 Paystubs.
- Wix Pay Stub Generator.
- Wave Financial Pay Stub Generator.
- Shopify Pay Stub Generator.
- The PayStubs.
Any of these mentioned tools offer several dozens of templates, convenient tools, and affordable price plans. Once you’ve filled out the necessary information and generated employee templates, you receive an email with all these documents. Then you can either store these documents in one place and give access to employees or print out and hand them over to workers.
Final Thoughts
Pay stubs are not regulated by federal law, but state and local laws require business owners to provide them to their employees. It takes time and effort to generate pay stubs manually, so most people use the software. While some businesses can afford expensive accounting software, others can’t. Luckily, there are numerous guidelines and affordable online tools to ensure that you generate pay stubs on time, and it doesn’t cost a fortune.
